Why Cultivating Customer Loyalty Is More Important Than Ever

Given all the heightened consumer expectations and, along with those, attendant power, brand officials realize the race for long-term customer loyalty is on and it’s a marathon, not a sprint.

Loyalty360 talked to Michelle Wildenauer, Senior Vice President of Strategic Services at The Lacek Group, about customer loyalty today, the future of loyalty, and the advice she’d offer companies desiring to boost their loyalty strategy in 2018.

Why is loyalty increasingly important and what trends do you see affecting its value?

Wildenauer: We’re living in a world of unprecedented change. Data and technology advancements have enabled innovation, business disruption, and new societal norms. As a result, the marketing landscape has shifted–power is moving from sellers to buyers, and businesses have a heightened need for customer loyalty, now more than ever.

One macro consumer trend affecting marketing is fragmentation. Today’s consumers are identified across a wide spectrum of attributes, including demographic, psychographic, behavioral, and transactional characteristics. Market fragmentation has opened the door to new, niche brands that meet individualized needs. From a business perspective, fragmentation has dramatically increased competition, magnifying the need for loyalty.

While the number of product and service options is growing, the number of retailers is narrowing. According to Kantar Retail 2017, the “average number of retailers shopped in the past four weeks (in-store and websites)” has steadily declined over the past 10 years. We’ve certainly seen some of this consolidation due to Amazon. We also recognize a trend toward streamlining purchase and payment, with stored value cards on our accounts and registered payment cards on our smartphones. While these are successful loyalty tactics, they make it difficult for some businesses to break through. 

Lastly, social networks have given consumers new ways to collect information and make buying decisions. An impressive 41 percent of Internet users, according to GlobalWebIndex Q2 2017, say they use social media to research new brands and products, making this the second most important media channel. And among 16- to 24-year-olds, social media now comes out on top, having overtaken search engines as their favorite channel. Additionally, roughly 25 percent of consumers say that seeing a brand or product receive lots of “likes” encourages them to buy it. This highlights the importance of loyalty—and of creating advocates among the most loyal consumers to sustain business success.

How has loyalty changed in the past 10 years?

Wildenauer: A decade ago, loyalty was nearly synonymous with a loyalty or rewards program. Back then, I focused on what I could control—primarily automated program benefits and marketing communications. Now loyalty is much bigger—it’s about recognizing and reinforcing total customer value, and creating sustained personal engagement with customers throughout every step of their brand journeys. Today, customer-centric organizations, and especially those with a Customer Experience team, are successfully implementing loyalty strategies across customer touch points, both within and outside of a program.

I also see another big change in the levers used to create loyalty. Traditionally, loyalty has been achieved through a series of rational benefits delivered to members in exchange for their business—for instance, points rewarded for purchases. While rational benefits are still critical (they give customers confidence they’ll be treated fairly in exchange for their business), emotional benefits are needed as well. These often come to life when companies live out their brand values—for instance, TOMS One for Oneâ commitment to help a person in need with every purchase made. This approach can be even more successful with younger generations, more apt to choose a company aligned with their values.

Who is doing loyalty marketing well?

Wildenauer: The Buffalo Wild Wings Blazin’ Rewards program is a great example of a customer-centric program—and one we helped develop. It targets people who love to meet up with friends to eat wings and watch TV sports. Members earn points for ordering food; perhaps better yet, members earn points when they check in with friends (10 points per friend). Plus, the program has a mobile app—a perfect offering for this target audience—with such perks as B-Dubsâ Wallpaper of your favorite college team for your desktop or mobile device.

The Starwood Preferred Guest award-winning program—and a longtime TLG client—is another standout; it offers an emotional connection to their hotel brands—for me, Westin and W, in particular. SPG was the first hotel loyalty program to offer free hotel nights with no blackout dates, and many other programs followed suit. Additional member benefits include one-of-a-kind vacation destinations; unique experiences in lifestyle, sports, culinary and entertainment with SPG Moments; and keyless entry (how convenient!) to your hotel room door with the program’s app.

Last, but not least, I’d be remiss if I didn’t mention Amazon Prime, a disruptor of sorts in the loyalty space and a great example of the relationship between brand and loyalty. Amazon is all about customer experience, operations, and innovation. And this seamless, customer-is-king brand comes to life even more through Amazon Prime.

What should companies focus on in 2018 and beyond?

Wildenauer: First and foremost, companies desiring success in customer loyalty need to put their customers at the center. This sounds cliché, but while most companies say it, only a few truly deliver. Get to know your customers—what their days are like, what their pain points are, what motivates their actions, and how they define success. Once you know these things, you can work outward from the center, solving customer issues with your offerings.

Think big. Loyalty serves as both a motivator and a reward for moving customers along the continuum from unidentified consumers to engaged customers to advocates. Knowing what makes customers “good” can help you attract others like them earlier in the continuum.

Unlock loyalty with a balance of rational, emotional, and utility-driving connections. Used in combination, these connections can deliver greater value, stronger customer loyalty, and a bigger bottom line.

Finally, organize your data and technology to enable the next phase of customer-centric loyalty. It’s more critical than ever to identify customers across channels, build more robust customer profiles, create personalized experiences, and measure and optimize in new ways.

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